Residential Mortgage Commentary - Week of July 24, 2017
2017-07-25 | 11:22:31
Real estate boards and governments here in Canada are arguing about the number of foreign buyers and whether they are unduly driving up home prices. But, at the same time, there is a group that is definitely taking money out of its home and native land to buy foreign real estate.
Canadians are second only to the Chinese when it comes to purchasing property in the United States. And there has been a boom in buying. In the 12 months from April 2016 to March 2017 Canadians bought nearly 34,000 properties in the U.S. with a record price tag of $19 billion, according to the National Association of Realtors. Chinese buyers spent nearly $32 billion.
While the Chinese are buying in the U.S. for the same economic security reasons as they are buying in Canada, Canadians seem to be doing it just because they can. The NAR survey indicates only about a quarter of the buyers (26%) intend to take up residence. Most of the rest say they will use their property for vacations or as an investment, or a combination of the two.
Most of the Canadian buyers appear to be making their U.S. purchases as a way to get the equity out of their Canadian homes. The majority (76%) made their purchase with cash. And they were not chintzy either, paying an average of $561,000 for their American home.